Coober Pedy is an opal mining town in South Australia’s outback. The thread has some interesting comments about another lease at Arkaroola that I’ll follow up on shortly.

However, this comment by “Jacinta” caught my eye:

1. Jacinta, on October 30th, 2008 at 1:32 am Said:

Is Challenger in the Arkaroola Sanctuary? - cyanide killing the wildlife.

While everyone here is talking about mining - I don’t know what practices they use in the Flinders Ranges at the copper mine but we spoke to a chap today whose job it was at a mining company in South Australia to handle cyanide tablets (without gloves) and was told not to worry about it when he reported that the big tank full of cyanide was running over the edges onto the ground.

(I read on the internet that cyanide is any chemical compound that contains the cyano group (C≡N), which consists of a carbon atom triple-bonded to a nitrogen atom.) but this is not very clear.

The reason he was upset was because he heard talks about their safe practices and because he is an aborigine he liked the idea of working on his own land in the desert. They said they want to employ aborigines but he was given a pretty bad job. He said they don’t really seem to like aborigines but they have to employ some because of something the goverment said.

After he got upset with the tanks spilling over he asked someone what cyanide was and found out it was poisonous. He thought it was some sort of chemical. He spoke to the bosses about the poison spilling on the ground all the time and said they should be taking care of the environment. He asked them if they got him to do that job because he was a black-fellow and why didn’t they tell him to use gloves. They sacked him. He isn’t even allowed back to pick up his belongings.

Does Arkaroola or the Flinders have a mine called Challenger over there? I only ask because of the water under the ground and this guy said it was bucketting out of this huge tank all the time like they had plenty to waste.

I notice people are talking about water a lot right now and wonder how come the mines can do all this stuff and have plenty of free water. I also heard that the government doesn’t really check as long as they pay money they can do a lot of damage and have free water. The other problem is the birds and animals that drink from water lying around the mine were dying. He said there were a lot of dead things around the place on the mine site.

He told us they use heaps of water and was worried because it might be running out. I know the aborigines are worried about the water. He said it’s like a spider web of streams under the ground and they used to be able to dig for it so it can’t be too deep and this stuff might get into it and poison some of the communities who have bores.

That’s all we’ve heard at the moment. He’s gone somewhere else now but it would be good to know how to have it checked.

Anyone with an idea about this can write to me on here cos we read it nearly every day.thanks Jacinta

It’s a damning indictment of the attitudes of some of the other cowboys in the mining game: attitudes towards indigenous labour; occupational health and safety; environmental damage; unfair dismissal.

“Jacinta” asks where Challenger, the mine on which her informant must have worked, is. It’s the other side of Tarcoola, on the northern side of the Trans Australian Railway.

It’s a gold mine, which explains the use of cyanide, used in the leaching process to extract gold. They produce over 100,000 ounces of gold annually and the mine life expected to extend beyond 2010.

The owners, Dominion Gold Operations Pty Limited, awarded a subsidiary of the giant construction company Leighton Contractors, a 4-year contract extension worth approximately $100 million to provide a complete mining service at the Challenger operation.

Makes me puke that a company that is doing so well out of the traditional lands of indigenous peoples can treat someone with a custodial perspective towards the land and its creatures in the way that Jacinta describes above.What are you going to do about this one, Paul “Hollowman” Holloway, Minister for Primary Industries?

What about you, Miner Mike Rann, “popular” Premier of SA (appropriately, to the right)?

(We won’t even bother asking Ministers with responsibility for indigenous affairs and the environment since they’ve long been missing in action).

Tuesday, October 28, 2008

Once again the capitalist press is doing a number on Aboriginal Australians, alleging that the women of the Yuendumu community in the Northern Territory told Federal Minister for Indigenous Affairs Minister Jenny Macklin that they “support the Intervention”. Macklin was at Yuendumu to open a new swimming pool, funding of which predates the intervention..

PEGGY BROWN, OAM, has no doubts about the emergency intervention or having half her income managed. "It's working, no doubt about it," she said.

The traditional owner delivered much the same message to the Indigenous Affairs Minister, Jenny Macklin, when they met for private talks yesterday.Skelton then concludes that the Intervention had split the indigenous community on gender lines: “The Walpiri community is split over the intervention on gender lines: the men, led by community spokesman Ned Hargraves, are bitterly opposed to income management and the women swear by it.”

All this type of misleading garbage does is to reinforce for white Australians the Big Lie that was advanced by Howard as justification for his destruction of NT land rights, namely, that all Aboriginal men are paedophiles or wife-bashers with a vested interest in opposing the Intervention.

Two things need to be said immediately: Firstly, Peggy was planning to give back her OA Medal to Macklin until the Intervention is stopped! Her speech at the pool opening was cut short by white staff running the pool opening because it was too fiery! Secondly, a journalist for rival paper the Australian, who also printed that "women like the Intervention", got given a copy of the petition Yuendumu people gave to Macklin - which included 236 signatures and more than half of these were women. Community members are pretty sure (but not certain) that Skelton saw it as well.

The full text of the statement that accompanied the petition presented to Macklin by Harry Nelson, former Yuendumu Council President, and signed by the 236 residents in a meeting of the community before the Minister opened the new Yuendumu pool, reads in full:

We, the residents of Yuendumu, want you to listen to the following statement and take our message back to the Federal and NT Governments:

When John Howard and Mal Brough lost their seats, we were happy. But now you are doing the same thing to us, piggybacking Howard and Brough’s policies, and we feel upset, betrayed and disappointed.

We don't want this intervention!

We talked to the Review board, and now the Government is not even listening to the report, and is keeping this intervention going almost unchanged. It is an insult to us.

This is our land. We want the Government to give it back to us. We want the Government to stop blackmailing us. We want houses, but we will not sign any leases over our land, because we want to keep control of our country, our houses, and our property.

We say NO to income management. We can look after our own money.

We want the Racial Discrimination Act 1975 reinstated now, not in 12 months.

The Government Business Manager is useless, expensive, and we don't need them. We want our community councils back instead. We want community control, not Shires. We don’t want more police, we don’t want more contractors, we don’t want more government people.

Everything is coming from the outside, from the top down. The government is abusing us with this intervention. We want to be re-empowered to make our own decisions and control our own affairs. We want self-determination. We want support, funding and resources for things coming from our community, from the inside.

Yuendumu has a lot of things to be proud of. Our community programs, like the Mt Theo program, the bilingual education program, Warlpiri media, the Old People’s program, Warlukurlunga arts centre, childcare, the youth program, should be supported, celebrated, and used as a model for other communities.

We want to keep our bilingual education program and use our own language to teach English, maths, and other things in schools.

We want you to give us respect and dignity, and stop telling lies about our people.

We want the Government to listen to us, talk with us, consult with us, and do things proper way.

According to locals, people in the Yuendumu community are “very, very angry”, one describing the reportage as “perhaps the most insidious piece of propaganda I have seen since the Intervention started.”

The "Intervention" must be repealed, the Racial Discrimination Act 1975 restored, and the recommendations of the Little Children Are Sacred Report, shamefully ignored by both the Howard and Rudd governments, fully implemented!

Monday, October 27, 2008

Many South Australians are starting to question the creeping crony capitalism that is emerging here.

The Australian Labor Party may as well be the Alternative Liberal Party or the Anti Labor Party, having rebadged itself as “pro-business, pro-mining and pro-growth”.

There’s not necessarily anything wrong with these three things in themselves; however, as a program packaged to the exclusion of concern for the rights of working people, of repudiation of the traditional links between the political wing and the trade unions, and with complementary preference for everything private over anything public, then it is not unfair to say that we are witnessing the reinvention of the ALP.

It is, in Foley’s terms, a “modern Labor Party… We have realised the error of our policies in the past.”

The Labor Party is for all intent and purposes a Business and Development Party.

The crony capitalism emerges in $3000 per head business breakfasts and dinners that act as fund-raisers for the ALP by allowing business people exclusive access to the premier and his senior ministers.

Prominent among those hosting such dinners are the consortia bidding for the six super school PPP contracts.

It is the sort of cronyism that one might expect in the Philippines or Indonesia.

It is therefore no great surprise that in such an atmosphere of corruption and direct commercial involvement in setting government direction, senior DECS bureaucrats have been prepared to connive in an attempt to infiltrate a local property developer onto a DECS principal selection panel!

The Executive Director of Human Resources, Mr Phil O’Loughlin, a career bureaucrat with no background in education (it’s bad enough that he’s the lead DECS negotiator in enterprise bargaining!) recently endorsed the addition of a representative of Delfin Lend Lease to the principal panel at Mawson Lakes Primary School.

The current principal has maintained close ties with the Delfin company, from which the land on which the school is built is believed to be leased. He has apparently been quite open in announcing that he is retiring early in order to take up a consultancy position with Delfin.

Whatever the truth of the relationship between the current principal and Delfin, such an astonishing step as including a Delfin nominee on the selection panel for the next principal could only have been taken by a senior DECS bureaucrat who has correctly judged the direction in which the political winds of the state are blowing.

He could only have committed to the inclusion of a commercial interest on a panel for the selection of a public school principal if he were convinced that such an unexpected and controversial step was in line with the current thinking of the government.

The AEU sub-branch at the school has condemned DECS’s insulting sell-out to commercial interests, as has the AEU Executive.

The AEU can be expected to fight this disgusting precedent for the extension of crony capitalism to the selection of school principals, and will need to make it absolutely clear that in the case of the six super schools – all schools for that matter – there is no room for property developers or real estate agents or any other commercial interests on selection panels.

Wednesday, October 22, 2008

Notice is hereby given that the Annual General Meeting of the Shareholders of MarathonResources Limited will be held at the Mercure Grosvenor Hotel Adelaide, 125 North Terrace,Adelaide South Australia on Friday, 28 November 2008 at 9:30am (Adelaide time).(Watch this space for invitations to the footpath outside the Grosvenor!)

Despite taking SA Premier Mike Rann to China a couple of weeks ago, Chris Schacht has seen the value of Marathon Resources shares nose-dive in the last day or so to 22 cents per share!

Just like the pilots in that Qantas jet that recently plummeted thousands of feet over the briny blue sea, the Marathon Directors are trying to manually control the fall with any lever that comes to hand.

Hence this morning’s gravity-defying announcement that the company “will start more non-drilling exploration in the Arkaroola Wilderness Sanctuary from today” (ABC Radio news).

“Marathon will now complete a gravity survey program of the site at Mount Gee,” says the announcement. “The company says this will add to its evidence of a significant uranium deposit at the site.”

Will this flapping of the management’s arms be enough to restore flight to the plummeting shares of Marathon Resources?

Unfortunately for Marathon, there might not be much joy in their gravity sampling joy stick.

They are having to to rely on non-invasive techniques, such as stream-sampling where a field hand simply collects representative samples of sand and rock chips from creekbeds. They were doing this straight after the indefinite suspension of their drilling program.

Gravity surveys are also non-invasive and get them around the ban on exploratory drilling. However, it is likely to be a complete waste of money on Arkaroola. Because of the gravitation effect of the hills it will add nothing to the understanding of the mineralisation unless there are significant density differences between the ore and the host rocks. That is not to say that it could not work there - but the only way to iron out the differences due to the terrain, is to remove the anomolies caused by the extra bulk of the mountains. It would be a huge amount of data collection and processing, and likely be easily subject to error as it would need to allow for every hill and valley.

This type of survey works well in flat country where gravity highs (due to ore bodies) and lows (eg due to presence of oil or gas) are obvious, where there are clear density contrasts.

So, a desperate announcement, but unlikely to significantly reverse the fall.

This development of a rapid fall in share prices for Marathon is somewhat surprising given that Schacht obviously had a chance to get into Rann’s ear about uranium exports in front of the uranium-hungry Chinese whilst on tour there.

But consider this….

Miner BHP Billiton has been travelling rough in the share crisis, (but nowhere near as rough as Marathon Resources, which faced an inquiry of it from the ASX, 22 October 2008.)

BHP was running around $28 a share when Marathon dropped to 21 cents. Were they really part of the same global financial crisis?

Marathon had the fortunate coincidence of having one of its directors travel to China with the Premier of SA, immediately before the latest developments in the financial crisis. Not that this (in spite of their egos) necessarily caused the crisis, but what they found out, or should have, might be a crisis for both, and for Marathon and SA.

The Chinese as we know are intensely interested in cleaning up their energy use, and increasing it. Uranium is the way of the future. Midget Mike talked it up plenty, before he went to China and while he was there. Hasn’t said much since, but he must be regretting the end of the three mines policy which so hamstrung the old ALP, pre Mike and therefore (remember the ego), pre-Rudd and pre-Schacht.

The triumvirate got rid of the three mines policy. Midget Mike got to be Premier, and National President of the ALP. Schacht got to be a Director of Marathon and Rudd the Dud got to be Prime Minister.

Unfortunately, WA changed its government a couple of weeks ago, and BHP Billiton rediscovered its interest in a little known uranium deposit called Yeelirrie. Happens to be the biggest and the easiest to mine in the world. Here’s an extract:

Yeelirrie, WA

The Yeelirrie deposit is between Wiluna and Leinster, WA, about 500 kilometres north of Kalgoorlie and close to the Goldfields gas pipeline. It is also close to the existing infrastructure serving WMC nickel mines at Mount Keith and Leinster.

Western Mining Corporation (WMC) discovered the shallow and extensive deposit in 1972. It is reputedly the world's largest sedimentary deposit of its kind. In August 1978 Urangesellschaft Australia Pty Ltd bought for A $3 million a 10% interest in the deposit, but this was reacquired by WMC in October 1993. At the same time Esso was brought into the project and given 15% equity in return for a commitment to fund 80% of the Stage I feasibility study and pilot plant, then costed at A $21 million. Esso withdrew in May 1982 for commercial reasons and the share reverted to WMC.

The deposit extends over 9 kilometres, is up to 1.5 kilometres wide, up to 7 metres thick and lies mostly at a depth of 5.5 metres below the surface. It comprises a mineral resource of 35 million tonnes with an average grade of 0.15%, containing 52 000 tonnes of uranium oxide, which could readily support a low-cost mining operation producing a proposed 2500 tonnes per year of uranium concentrate with 1000 tonnes per year of vanadium oxide by-product.

An Environmental Impact Statement was produced in 1978 and resulted in environmental approval from both state and Commonwealth governments. In the twelve years to 1983 WMC and its partners (then including Esso) spent a total of $35 million preparing to develop Yeelirrie as an open cut mine, including building and operating the pilot metallurgical plant at Kalgoorlie. A $320 million project was envisaged and sales contracts were being planned. However, the 1983 federal election and implementation of the ALP "three mines policy" meant that permission to negotiate sales contracts was withdrawn in March 1983. Plans were then abandoned, and WMC's attention focussed on developing Olympic Dam.

A new state Labor government was elected in 2002 with an ideological anti-uranium stance. Pursuant to this, the 1978 state mining agreement for Yeelirrie was revoked in March 2004. However, WMC Resources retained the mining tenements and awaited future opportunities after undertaking rehabilitation of the site by the end of 2004. In 2005 ownership passed toBHP Billiton Ltd.

The same site describes Mt Gee, of interest to Marathon, Mr Rann (his home solar panels were installed by a then principal of Marathon) and Mr Schacht:

Mt Gee, SA

Working with data from earlier drilling campaigns, Marathon Resources has quantified to publishable standard the uranium resources of the Paralana ore system comprising a number of uranium and polymetallic ore bodies spread over 12 km in the north Flinders Ranges of South Australia. The Mt Gee deposit has a total of 33,000 tonnes U3O8, mostly as inferred resources and mostly low-grade (0.05% cut off) but with some higher-grade portions. Other or ebodies in the system are also prospective. The area has been drilled extensively since 1968 by Exoil, CRAE (Rio Tinto) and Goldstream. In 2007 Marathon initiated a pre-feasibility study and an environmental impact study for underground mining at Mt Gee. The results of ongoing drilling and the initial studies are expected in mid 2008.

The Mt Gee - Mt Painter mineralisation is the source of uranium in the palaeochannels around Beverley, a few kilometres east.

So, it’s a smaller, low grade, hard to get deposit, in the middle of a sanctuary. Worse, WMC clearly preferred its WA prospect to SA’s, but was foiled by a difficult (WA) government on one hand, and assisted by a compliant (SA) one on the other. It developed the more expensive underground mine at Roxby instead. WMC bailed out and BHP took over its interests, here and in WA.

Enter the newly elected WA Liberal government. BHP’s in the box seat. It can cite the global financial crisis, and point to its share slide, as a reason to defer expansion at Roxby. It can play WA against SA to see who will help it the most with its development. It has the choice – here or WA.

It’s got the uranium market sewn up with its ownership of all the major deposits. Marathon’s a minnow, valued at around $13.6m (ASX, 22 October 2008). It can’t hope to compete with ore that’s many times more expensive to mine and one third the quality of BHP’s Yeelirrie deposit which has already been brought up to pre-production stage. No wonder Marathon’s share price is dropping. Schacht doesn’t have to tell anyone to unload it while they can get a cent. Any punter worth the name in the market can see it coming.

Worse. For Midget Mike the Miner, there is the unsavoury prospect that after his trips to Chile and China, BHP will have rediscovered its interest in the larger, easier to mine Yeelirrie deposit. It might, in the name of its own financial crisis, be induced to suspend its plans for expansion at Roxby and, after a time, and with suitable inducements, rediscover its much more economic Yeelirrie prospect.

This gives Midget Mike much to think about, and explains the trip to China with his mate from Marathon. No big announcements on his return. Think of the consequences. An end to the SA mining boom! End to the expansion and the photo opps developing infrastructure from Port Augusta to Roxby to Beverly. Won’t have to worry about mining Arkaroola. That’s a salvation, Jane.

So who is in the box seat? BHP and the premier of WA. Just watch this space. And whose shares and electoral stocks are dropping?

Thursday, October 16, 2008

This case of unusual rank and file union activism in China can be seen as both good and bad news. The good news is that, in the North-Eastern Chinese port city of Yantai there are workers' willing to struggle for two years for their right to form their own union that will stand up for their rights. The bad news is that this struggle has taken a heavy toll on union activists, at least seven of whom have been fired because of their union activity as part of a persistent and illegal union busting campaign by the company. The company in question is Ole Wolff (Yantai) Electronics Ltd, a Hong Kong and Danish co-owned company that produces cell phone speakers, receivers and other electronic productions. Ole Wolff Yantai is owned by Ole Wolff (Asia) in Hong Kong, and the latter in turn owned by Ole Wolff Electronics. Also unprecedented is that these activists have directly sought help from a foreign trade union, in this case a few Danish trade unions. Almost unbelievable is that *the story of this protracted struggle has been widely covered sympathetically by the local media, the ACFTU's Workers' Daily, China Central Television and Central People's Radio in Shandong Province and OWYTU's own excellent website.

CLNT has translated numerous accounts of the brave and persistent activism on the part of OWYTU leaders, to assist international trade unions – especially from Denmark – rally together in solidarity with trade union activists at Ole Wolff.

A rare case of rank and file union activismChina is notorious for its "yellow unions", bureaucratic entities affiliated with the official All China Federation of Trade Unions (ACFTU), more interested in maintaining harmonious relations with management than representing the interests of workers.

However the Ole Wolff (Yantai) Trade Union (OWYTU) is different. Ole Wolff workers themselves applied to establish the union after 67 women workers were fired in 2006 for complaining to the local Labor Department about sudden reduction in their wages, and the company's refusal to sign employment contracts. Ole Wolff Yantai refused to acknowledge the OWYTU, so in September 2006 workers went on strike for 13 days. The OWYTU was successfully established one month later, making it, in workers' own words, "the first Chinese trade union to be set up through strike." The OWYTU has taken a confrontational stance towards both the company and the local union branch. It describes itself boldly as a "red union" (chise gonghui) (i.e. Socialist) while dismissing the ACFTU as a "yellow union" (huangse gonghui). On the union's internet blog is a feisty article, entitled: "Where there's oppression, there will be resistance!" (Nali you yapo, nail jiu you fankang!) In China, such militant language is very rarely heard in trade union circles.

Even though the OWYTU was successfully established in October 2006, what followed was an unbelievable string of union-busting attacks from the company. Union activists have reported an incredible number of threats against them – too many to list here, and so we instead direct readers to the following chronology of events compiled by the OWYTU on its internet blog translated by Globalization Monitor in Hong Kong.

In short, Ole Wolff's attacks on the union have included:• Firing seven union activists – some more than once, such as Ms Liu Meizhen who was been fired from Ole Wolff on four separate occasions! Acting union chair Ms Jiang Qianqiu was fired for objecting to workers made to use cleaning fluid containing benzene (a known toxin).• Refusing to sign employment contracts with workers until they revoked their union membership (the company has since capitulated).• Posting a public notice threatening that each striking worker would have to compensate the company 15,000 RMB if they did not return to work.

Ole Wolff has ignored two court orders to re-instate six of the fired union activists, one from the Yantai City Labor Department in December 2006, and another from the Yantai City People's Intermediate Court in October 2007. Ole Wolff has also refused proper compensation. Furthermore, according to Ms Liu Meizhen, the company has never filed the paper work to terminate her employment, and has refused to return her personal documents. Without these documents she is unable to engage in formal employment anywhere else, and her social insurance and pension account are withheld by Ole Wolff. Ole Wolff has also ignored an order from the Yantai City Labor Department to reinstate the current union chair Ms Jiang Qianqiu, who was also fired by the company for her union activity. The company even made false claims that Jiang Qianqiu had signed a document renouncing her claim for compensation.

CLNT has translated a sympathetic investigative report of the union's struggle covered by the Shandong Evening Press. The report is long, however it conveys just how incredibly persistent Ole Wolff's attack on the union has been and how hard the workers fought back.

Download the translated article here:"Women Workers Repeatedly Fired for Applying to Set Up a Union: the pains of a grassroots foreign-enterprise trade union defending workers' rights"CLNT_OleWolff_newspaper.pdf

The local trade union – the Fushan District Trade Union – has been unsympathetic to the OWYTU and apprehensive about its radical stance against management. In the early days the ACFTU in Beijing was supportive of the OWYTU, and so the local Fushan union followed suit, but very quickly it adopted a critical stance when union activists wrote a letter demanding improvement in working conditions in October 2006. Since 2007 the Fushan union has done nothing to support OWYTU.

The OWYTU has proved itself willing to challenge the district union. CLNT has translated a report from the OWYTU's internet blog, describing how the OWYTU angered the Fushan District Trade Union by video recording a tripartite meeting with the company and Fushan District Social and Labour Protection Bureau, in order "to prevent their [the Fushan District Trade Union's] denial of what happened once we were out of the room". Both the OWYTU's insistence of filming the meeting, and the confrontational tone of the written account, demonstrates how unusually courageous this union is.

The Fushan District Labor Department has been unsupportive of the OWYTU. When workers went on strike in support of their application to start the union in October 2006, the company claimed the strike was illegal. When contacted by the OWYTU, the national ACFTU confirmed that the strike was not illegal. But the Fushan District Labor Department sided with the company, insisting the strike was illegal. The response from Chief Shi of the Labor Department was: "What does the ACFTU know?" The OWYTU had to campaign hard to get the Department to rule in favor of unfairly dismissed union chair Jiang Qianqiu in October 2007, and when Ole Wolff ignored the ruling the Labor Department did nothing. In December 2007 the OWYTU even tried to sue the Labor Department for administrative neglect, but the suit was rejected by the court claiming that the supporting documents were "not well written".

International Support

In yet another rare move by the OWYTU, union advisor Zhang Jun contacted Denmark's biggest union federation, the United Federation of Danish Workers or 3F (Fagligt Fælles Forbund) in April 2008, requesting its support. In our knowledge, this is the first time that Chinese grassroots union activists have gone to a foreign union for help. In her letter, Ms Jiang expressed:

"We have almost exhausted all means, including judicial, administrative, media, the Internet etc, to stand up for our rights but still unable to make the company to comply with the laws."

By last month 3F, the Danish Confederation of Trade Unions (LO) and the International Trade Union Confederation (ITUC) have made contacts with the Danish parent company of Ole Wolff expressing their concern over the repression of the OWYTU, and other problems with working conditions including lack of employment contracts and underpayment of overtime. The ITUC sent a copy of its letter to the Fushan Labor Department. Mr Ole Wolff responded to ITUC expressing confidence in the "excellent" working conditions at Ole Wolff Yantai. Ole Wolff also met with 3F personally, and expressed that these problems were out of his control.

Ole Wolff's response to ITUC was translated into Chinese, and the OWYTU itself has rebutted Ole Wolff's claims about working conditions, saying that the problems outlined in 3F's letter were only remedied after workers went on strike in 2006.

Thanks to the committed concern of a Danish journalist, the case was reported on Danish national television.

In another demonstration of solidarity, in early September representatives of four Hong Kong NGOs and the ITUC/HKCTU/HKTUC Hong Kong Liaison Officer (IHLO) protested outside Ole Wolff's office in Hong Kong. They prepared a protest letter addressed to company management, but the company refused to receive it. News of the protest reached the OWYTU in Yantai.

Effective use of internet blogs

Another remarkable feature of this case has been the effective publicity work carried out by union members and – in particular – an "advisor" (guwen) to the union, Mr. Zhang Jun, the husband of fired union activist Liu Meizhen. Zhang Jun has used an internet blog to accumulate and distribute an impressive collection of documents in support of the OWYTU struggle. http://blog.sina.com.cn/youyudzhongguoren

As the Shangdong Evening Press article (available for download above) points out, Mr Zhang Jun himself has played a unique role in this struggle. We have never before heard of an "advisor" representing a Chinese trade union in negotiations with management and with upper levels of the ACFTU. In this very complicated case, the Fushan District Trade Union has behaved ambivalently in relation to Zhang. The district union recognizes Zhang as a negotiating partner, but at the same time tries hard to publicly discredit him. Zhang does enjoy some support from the national ACFTU, and this surely influences the local Fushan union's treatment of him. Given Zhang's novel role in this saga, it is worth wondering whether in future this might be a way of involving actors from outside the ACFTU and the government in trade union negotiations.

At the time when this posting is uploaded the struggle is still continuing.

Wednesday, October 08, 2008

The current financial crisis had its origins in the sub-prime mortgage crisis of 2007, and has seen both a major melt-down or devalorisation of huge amounts of fictitious capital born of speculation, and a loss of liquidity as financial institutions lose confidence in the extension of credit to customers who might be industrial capitalists, merchants, other banks and financial institutions, and the working class.

In respect of the latter, some pundits are predicting that the financial crisis will soon move onto forms of personal credit other than residential mortgages and in particular, onto the world of credit cards.

Credit is an arrangement whereby the purchase time of a commodity is separated from the payment time.

Credit a distinctive creature of capitalism

Although this reached a particularly vicious stage for working and middle class people in the 1920s with the refinement of the system of hire purchase, the separation of sale and payment arose within the system of commodity circulation at the beginning of the capitalist era.

Money, as a commodity whose function was to exist as the universal equivalent of all other commodities, was both a means of circulation of commodities and a means of payment for commodities.

“With the development of circulation,” noted Marx in Capital, “conditions arose under which the alienation of commodities becomes separated, by an interval of time, from the realisation of their prices…The vendor becomes a creditor, the purchaser becomes a debtor”.

After a time, the requirements of the capitalist mode of production for extensions to its scale of operations led to the centralisation of individual capitals in special institutions – banks, joint-stock companies etc – whose purpose is to grant credit to individual capitalists on a large scale, where before, credit was simply a means of deferring payment for commodities on a small scale.

The emergence of credit removed the need for individual capitalists to hoard savings, during which time capital is dead and incapable of reproducing its own value, and by assisting in the circulation of capital, albeit as interest-bearing capital, also promoted further accumulation. However, it came at the cost, or inherent weakness, of a separation of credit from its monetary basis and of its likely expansion, therefore, as fictitious capital.

This process becomes more acute with the development of imperialism and the merging of bank capital and industrial capital to produce finance-capital, and with it a massive extension of the system of credit within all spheres of the economic activity of society and amongst all classes of the people.

Credit nevertheless retains its two-fold function of (a) extending production and (b) facilitating exchange. In its first function, credit is an important factor in the cycle of overproduction, enabling the advance purchase of new or replacement machinery as well as raw materials relative to their capacity to pay for themselves through their combination with the labour power of the worker; in its second function, it can aggravate what it has already helped cause – over-production – by having its own price (interest and fees) increased to the point where it is no longer an option for the ordinary consumer. Reductions in the ability of credit to facilitate exchange lead to reductions in the ability of society to consume what has already been over-produced.

Disciplining the markets and the masses

The sensitivity of capitalism to fluctuations of monetary and fiscal policies has grown throughout the course of the current crisis. We see interest rates used to try and discipline the financial markets. We will see a further aggravation of primitive accumulation in the non-industrialised world as peasants are forcibly separated from their traditional means of production and turned into wage workers whose surplus value as profits are removed from their countries of origin and repatriated to the imperialist countries. In the industrial countries, wages policies will emerge to discipline the working class and assist in the production of surplus value, not to bring fictitious capital back into line with the real value of commodities in circulation (at a loss to finance capitalists) but to use realisable surplus value as a means to valorise the speculatively created “values” of fictitious capital (to preserve the “gains” of the finance capitalists).

However, wages policy is a double-edged sword for the capitalist class. On the one hand, individual capitalists seek to reduce the wages of their own employees to the absolute minimum required to guarantee the daily reappearance at the workplace of each employee. On the other hand, the capitalists as a whole benefit from an expanding domestic market and this must largely come through other capitalists’ waged and salaried employees.

The extreme enthusiasm of the individual capitalist to part with more than the absolute minimum of capital in the form of wages is matched only by the extreme enthusiasm of every other capitalist, of the capitalists as a whole, to get their hands on those wages through sales of commodities and services in the market place.

Not only do they want their hands on wages already paid; their avarice extends to wages yet to be paid, to future wages. Hence the all-round promotion of “buy now, pay later” schemes in almost every area of retailing or trade.

Twenty years ago, what was left of a worker’s wage after rent or housing mortgage payments and loans for major purchase items such as a car, and for hire purchase arrangements for items like white goods or electrical goods, was spent as cash on commodities for daily use such as food and petrol. The emergence of the personal credit card has brought even daily consumables into the world of credit purchases. The technology that allowed one single machine (ATM for cash withdrawal or EFTPOS for purchases and/or cash withdrawal) to process transactions regardless of which card is used spurred the use of credit cards for minor purchases. In 1987 “cashless shopping” met with some consumer resistance with 80% of shoppers favouring cash payments whereas today it is rare to see cash used at the supermarket; indeed, supermarkets are increasingly moving towards customers swiping their purchases’ bar codes and swiping their cards for payment, thus eliminating the “checkout chick” altogether.

A credit card implosion?

But it is not just that small scale personal consumer credit use mirrors the large scale financial credit used to lubricate the circulation of capital.

Both are linked. Credit card debt is difficult to analyse because many people use it for rewards programs and retain the capacity to pay it off each month. For example, there was roughly $US970 billion owed on credit cards in the US at the end of July 2008. $US26.6 billion was charged-off during 2007, and it is estimated that $US41.5 billion will be charged-off by the end of 2008 and as much as $US96 billion by the end of 2009. (A charge-off occurs when the creditor writes off the debt owing as a “bad debt”, usually 6 months after it should have been paid. They no longer list it as an asset, although you still owe it and they’ll still chase you for it.)

That’s a fair amount of credit card delinquency in the system, and it links to big finance because banks and financial institutions buy and sell securities backed by credit card debt in the same way that they buy and sell securities backed by residential mortgages. Packages of credit card debt may constitute a smaller card in the financial house of cards than those made up of sub-prime mortgages but they are none-the-less structural beams and pillars, and their collapse will add to the current crisis.

Credit cards link to the bigger picture in other ways too. Banks are in the grip of financial constipation. Banks and other lenders that might, up until a few days ago, have still been flooding your letter box with offers of new credit cards (as David Jones has just done with its store card now a use-anywhere American Express card), will now be cutting back on new card issues and cutting credit off from consumers unable to meet repayment obligations. Consumers for their part, will reduce the use of credit cards as they tighten belts.

We are already seeing this in Australia where collectively we owe a record $A44 billion on credit cards, or an average of more than $A3200 per card. Note that that is “per card”, not “per person”. There are an estimated 112.9 million credit cards in Australia which has a population of approximately 20.5 million. There are more than 100 million purchases on credit cards each month.

Despite (or perhaps because of) the popularity of credit cards, the household gross debt – the difference between income and debt – has exploded from 50% in the early 1990s to 160% in 2008. Credit card fees (annual fees, over-limit fees, late payment fees etc) have risen 170% in the past five years and data suggests that consumers are being hit with penalty fees more and more often. Consumers are also hit with retailer surcharges for credit card use after the Reserve Bank got rid of the “no surcharge” rule in 2003.

So, look for credit card debt to feature in a new wave of financial crisis as the measures taken to “stabilise the financial system” solve or defer one set of problems but move the pressure of fictitious capital on its monetary base to other weak points in the system.

Tuesday, October 07, 2008

Marathon Resources Director and former ALP Senator Chris Schacht is currently in China with Premier Mike Rann and business leaders talking up trade ties between South Australia and the People’s Republic.

Schacht, who chairs a little-known consultancy called the Australia China Development Company, was due to be co-leader of the group with Central Market identity and Australian Asian Chamber of Commerce and Industry President Irena Zhang before the pair scored a coup by enlisting the prestige and the presence of the office and person of the State Premier.

Rubbing shoulders with Rann for the duration of the trip will provide Schacht with excellent opportunities to get into the Premier’s ear about the importance to the State and to SA-China trade relations of allowing Marathon to mine uranium inside the Arkaroola Wilderness Sanctuary. And he won’t even have to buy a $3000 per head ticket to one of the Premier’s notorious fund-raising dinners. Schacht has done well for Marathon.

The opportunities will be all the better for the fact that the Chinese state investment company CITIC is equal second largest shareholder (with Queensland’s Talbot Group Holdings) in Marathon, each commanding 10.45% of the company’s shares. HSBC Custody Nominees (Australia) Ltd recently amalgamated previously separate share portfolios in the company to emerge as the largest shareholder with 13.1% of shares.

It will be the ideal environment for the current State Premier and the former Federal Senator to iron out the obstacles to Marathon resuming its exploration and drilling program.

(Schacht has a diverse range of talents. He is a leading figure in Australian and international volleyball circles, his son Andrew being a member of the Olympic team. Volleyball is second only to table tennis in sports popularity in China. Schacht, who had been a member of the Federal Government’s Defence Subcommittee of the Joint Standing Committee on Foreign Affairs, Defence and Trade for 12 to 15 years, recently registered as a Federal lobbyist for Swiss aircraft manufacturer Pilatus.)

Wednesday, October 01, 2008

State media in China first began reporting about babies falling ill from milk formula on September 11, after one baby had died from kidney stones in Gansu province. The first reports spoke of "an unknown number of infants in at least seven provinces and regions suffering from kidney stones after drinking milk formula marked San Lu".

The following day, as Chinese authorities revealed that the chemical compound melamine had been found in samples of baby milk powders, Chinese media reported that the San Lu Group had issued an immediate recall of milk formula made before August 6. The only comment that could be drawn from Fonterra was, "We understand that the product involved is only sold in China."

On September 15, as the Chinese media reported a second death from melamine-laced milk powder, the New Zealand Prime Minister announced that it was her government that had blown the whistle on the tainted milk scandal and set off the recall following the failed attempt by Fonterra to have its joint venture partner's products removed from sale.

That same day, Fonterra issued a statement which was stunningly ambiguous and evasive. They revealed that they had been advised of the contamination of baby formula at a San Lu Board meeting which had taken place on August 2! The statement goes on to say that they "pushed hard" for San Lu to recall the formula and that San Lu "immediately implemented a trade recall of infant formula" followed by "a full public recall of all infant formula". However, this "immediate recall" didn't happen until September 12 - 5 days after the New Zealand government alerted the Chinese government after having been alerted by Fonterra 3 days before.

What was Fonterra doing between August 2 and September 5, when it took the step to inform the New Zealand government?

At a media conference on September 24 to announce its 2007/08 results and cash distribution to farmer-shareholders, Fonterra management offered an answer to explain its scandalous omission: "We firmly felt the most effective way to get the product off the shelves and away from consumers was to work within the Chinese system".

But did it take one month for Fonterra to realize that working within the Chinese system wasn't working? The long history of official complicity and complacency in the face of food contamination scandals in China should have been taken as a call to immediate action.

Amazingly, company management continues to contend they had done all they possibly could during this period, and are now trying to relativize their responsibility by calling San Lu's handling of the melamine scandal "appalling" and accusing them of having attempted to cover up the contamination since December 2007.

Fonterra's own handling of the crisis can only be called a cover up - not only of the contamination scandal, but of its own negligence. Why was Fonterra not aware that San Lu had been receiving complaints about contaminated milk powder since December 2007? The answer might be found in the company's own admission that only one of its 3 directors on the Board of San Lu is a Mandarin speaker. Unofficial websites had been asking questions about tainted milk powder from San Lu for months. Why was Fonterra not monitoring these blogs about food safety? Why did Fonterra fail to put people and systems in place to ensure standards and product safety? Why did it fail to put any efforts into securing the safety of the supply chain?

It is clear that working within the Chinese system has not brought the hoped-for results. Four babies have died and some 50,000 more are ill from adulterated milk powder; Fonterra has taken an impairment charge of the equivalent of USD 95 million to cover the cost of the product recall and loss in San Lu's brand value; and Fonterra's own goodwill has been damaged as the public continues to ask how the company could possibly have let this scandal for so long without publicly sounding the alarm.

Fonterra have talked about the tragedy of the deaths and the thousands seriously ill. They have talked about damage to the brand and loss to their investment. What they have not talked about is that their negligence in China and damage to their reputation puts jobs and livelihoods at risk, including in New Zealand where their products represent 25% of export revenue.